Gas prices: Don't blame the president

  • Article by: FRANK CERABINO , Palm Beach Post
  • Updated: July 1, 2012 - 8:16 PM

Fox News anchors claimed falling gas prices are a sign of a failed president. Don't believe it.

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Fox News commentator Bill O'Reilly.

Photo: Jeff Christensen, Associated Press - Ap

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Gas prices may be going down to $3 per gallon this summer. It's Obama's fault. At least, it is according to Fox News, which advised its viewers last week to view the falling price as another sign of President Obama's failed presidency.

I was subjected to this dose of misinformation while waiting for my dentist, who apparently likes to show Fox News in the waiting room as a way to pre-numb his patients.

The gang at "Fox & Friends," with a panel of "experts," were getting out the message that the falling prices at the pump were simply a sign that our demand for gasoline has fallen due to the unemployment caused by the president's failed economic policies.

The grim-faced panel explained that the gas savings was actually bad news. Then, before going to a commercial, the show played a snippet from Jay Leno's monologue from the previous night.

"Gas prices are expected to drop to around $3 a gallon by this fall," the late-night comedian said. "The price drop is the result of a complicated system. It's called the election."

I guess this is what's meant by the "we report, you decide" motto of the network. You get to decide between lower gas prices being another sign of (a) Obama's inability to make American's lives better or (b) Obama's ability to fool the American people while failing to make their lives better.

What's odd is that Fox actually records its programs. So anybody with a modem can do a Google search and see, for example, what the network's political message was a few months ago, when the average price of gas had spiked to $3.93 a gallon.

"Right now, we're headed to $5 a gallon, by the end of summer, $6," Bill O'Reilly opined on his Fox show. Greta Van Susteren was equally gloomy: "Brace yourself, it will only get worse as we head for summer."

Donald Trump, appearing on "Fox & Friends," said it would be "maybe $7" this summer, but show host Steve Doocy, outdid him: "How does $8 a gallon sound?"

Like a Republican fantasy. In March, the Republican National Committee made rising gas prices a centerpiece in its attack on Obama.

"The Democrats' war on energy has threatened American energy independence, destroyed jobs and contributed to rising gas prices," the committee said, bolstered by a Washington Post/ABC News poll showing that high gas prices were hurting Obama's approval ratings.

But those gas prices started falling, and by Memorial Day, the price of gas was an average 12 cents a gallon less than it was at the same time last year. And economists were predicting a long, slow decline in prices for the rest of the year.

"The market is implying that gas prices will be below $3 a gallon in November or December," Tom Kloza, the chief oil analyst for the Oil Price Information Service, told me. "That's not unusual. If you don't get hurricanes and if Iran doesn't create mischief, prices get lower the last 100 days of the year."

Kloza said that any American president has a negligible impact on short-term shifts in the price of oil, which is a global commodity.

"So how could people be so wrong and go on TV and say gas prices were going to be $8 this summer?" I asked.

"I love the people at Fox, Bloomberg and CNBC, but they tend to have guests with vested interests in markets moving higher," Kloza said. "So they tend to predict what they want to happen. When I go on those shows, I feel like Gandhi, because I don't have any money invested."

As for the Leno joke, he's a bipartisan joke teller when it comes to oil prices. "President Bush spoke with the Amish," Leno said during the 2004 political campaign. "He didn't want to, but it was the only group he could find that wasn't upset about the high price of gas."

I'm guessing that clip wasn't played on Fox shows, which continue to blame Obama for gas prices, no matter what direction they're moving. Sean Hannity likes to point out that gas prices were an average of $1.84 when Obama took office, implying that this was the norm before Obama took office.

But in the summer of 2008, while George W. Bush was president, crude oil prices were at record highs, and Americans were paying an average of $4.11 a gallon at the pump.

And what brought those per-gallon prices from $4.11 to $1.84 was the collapse of the American financial-services industry in fall 2008, which created an international recession that caused OPEC to remove 2.2 million gallons from its daily production in December 2008.

Gas prices have been climbing since then as part of a recovery from a traumatic, worldwide event; the subsequent growths of the economies in China and India, and the tumultuous Arab Spring in the Middle East, which introduced an element of uncertainty on supply.

Peter Van Doren is a Princeton University professor who writes about and studies the oil industry as senior fellow at the libertarian Cato Institute.

"When the price goes up, it's because of supply and demand, and when it goes down, it's because of supply and demand," he said. "There's none of this conspiratorial stuff."

Well, are the Republicans right? Has Obama's so-called "war on energy" depressed the supply of our domestic oil production, therefore making it more expensive during the past three years? "Oil production in the United States has risen dramatically since 2008," Van Doren said. "It's unprecedented."

But that has nothing to do with Obama, either, Van Doren said. It has to do with a boom in America's domestic production of sweet crude oil in places like North Dakota, and in the technological breakthroughs in extracted oil from shale. And that higher oil prices make it worthwhile for oil companies to invest more in production.

"Obama can't take the credit or the blame," he said.

And in the end, he said, it's not about us anyway. "Gas prices are falling now because China's economy is slowing, and when that happens, it has a dramatic effect on raw materials such as oil," he said.

Van Doren said he was surprised by my call. "The press calls us when prices are going up, but nobody calls when they're going down," he told me.

"Why is that?" I asked.

"Politics is a lot about hate," he said.

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